Stan Reiff, Partner and Consulting Practice Group Lead at CapinCrouse, and Joe Park, CEO at Horizons Stewardship recently discussed how church leaders should approach budgeting when faced with the uncertainty of a pandemic and the prolonged effect it has had on local church ministry. This incredibly practical webinar touches on the keys to successfully weather uncertainty and positioning your church for maximum ministry impact. 

Watch the Interview

The Road Ahead is Unclear

There is no doubt that church leaders face an uncertain future, and this may be the first time many leaders have been forced to reconsider “business as usual” ministry practices such as annual church budgeting. Normally, this would be the season of time when last year’s projections, and this year’s actual giving and expense history would be carefully reviewed and assembled for the coming year. But, 2021 is likely to be anything but normal.

So, how do you budget for a future that doesn’t look like the past? This is precisely the part that makes church budgeting so difficult and challenging, especially during times of uncertainty. Budgets provide guardrails and milestones to help structure anticipated contributions and projected expenses to ensure the ministry is operating in a financially sound manner.

Three Critical Factors to Consider

There are three types of expenses in your budget that you must be mindful of as you plan for the coming year:

  1. Fixed Costs. This is your mortgage, utilities, and other obligations that can’t be renegotiated without extraordinary effort.
  2. Semi-Fixed Costs. These costs are often payroll related. You can control hourly, seasonal, and even your current staffing levels.
  3. Variable Costs. These expenses are often program-driven and ministry-related.

As you evaluate your current year’s budget and actual contributions and expenses, it might be helpful to categorize each current expense into these three buckets. That way you know what expenses are up for discussion and which ones aren’t. This will help you know how to prioritize budgeted expenses, especially in relation to projected contributions.

The Power of Microbudgeting

Microbudgeting isn’t necessarily a technical term. But, it does relate to a discipline of financial management often employed when greater variability exists between actual revenue and projected revenue. The idea is that the tighter the window between actual contributions and actual expenses, the more opportunity you will have to make real-time adjustments and decisions based on factual information.

This does not mean you don’t complete a twelve-month budget. What it does mean is that you revisit your budget within the context of a 90-day primary window of time. This can accelerate the necessary decisions and changes to keep contributions and expenses aligned throughout the year. If giving is up, then you have the opportunity to allocate more dollars for ministry-related expenses. If giving is down, then you can reprioritize your expenses around what’s most important right now.

Keep the Focus on Ministry Impact

If your church is facing uncertainty, the people in your church are, too. It’s precisely when uncertainty strikes that churches must position themselves to be present and meet the needs of their congregations and communities. Pulling back on funding ministry impact during uncertainty might temporarily save the church money, but it will, no doubt, have a lasting impact on generosity initiatives.

Times of uncertainty are also times of great ministry opportunity. Churches should be looking for ways to become more efficient with their spending, reduce unnecessary overhead, and move as many dollars as possible into mission delivery functions. When leaders are willing to be honest about the gaps between funding and impact, the people in your church and community will be inspired to be generous to ensure the needs of others are met.

If you’d like to know more about microbudgeting, download this eBook from CapinCrouse to help you through it. If you’d like to know more about how to fund ministry impact during uncertainty, download the church ministry funding guide from Horizons.